The Securities and Exchange Board of India (Sebi) on Wednesday came down on the investment banking fraternity for acting in a manner that has proved detrimental to the interest of the retail investors.

The capital market regulator has blamed bankers for the fact that bulk of the public offers are currently trading below the issue price. Speaking at a seminar organised by the Association of Investment Bankers of India, Sebi chairman UK Sinha said that the credibility of the investment banking community has taken a hit as retail investors are wary of investing in public offers.

According to a Sebi analysis, there were 117 issues between 2008-09 and 2011-12 out of which 72 issues are trading not only below the issue price but also below the price after adjusting for market decline. “Two-thirds of issues are trading below issue price after adjusting for general decline in the broader index,” Sinha said.

“The retail investor is thoroughly confused about what to expect from the primary market. This is a question of credibility for all of us and we have to take serious steps to restore that. Some amount of introspection is required and if we fail then despite all our efforts we will not be able to draw retail investors and even domestic institutional investors,” he added. Comparing the investment banking with the match-making business, Sinha said that it seems that the bankers highlight only the good qualities of a firm while choosing to ignore the risk factors. “What does the Indian match maker do? He goes out and tries to sell all the good qualities of the bride groom. Are we doing the same with firms that are not ready (for an IPO)?” he asked.

He said that bankers cannot always attribute the performance to the broader market fall. “We can argue that we are not responsible for the post issue price (or) for the general economy. But the data is after adjusting for the decline in the market. Obviously, some amount of introspection is required,” Sinha said.